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Who May Bring a Federal False Advertising Suit?
April 02, 2014

The Supreme Court's recent decision in Lexmark International, Inc. v. Static Control Components, Inc. prescribed the appropriate framework for determining whether a plaintiff has standing in a false advertising action under the 15 U.S.C. 1125(a). Prior to this decision, there were three competing approaches to determining whether a plaintiff has standing to bring suit under the Lanham Act:

· The Third, Fifth, Eighth and Eleventh Circuits utilized an antitrust standing or a set of factors laid out in Associated General Contractors;

· The Seventh, Ninth and Tenth Circuits used a categorical test which only permits actual competitors to bring false advertising suits under the Lanham Act; and lastly

· The Second Circuit applied a "reasonable interest' approach," under which a Lanham Act plaintiff "has standing if the claimant can demonstrate '(1) a reasonable interest to be protected against the alleged false advertising and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising.'"

In this case, the Sixth Circuit applied the Second Circuit's reasonable-interest test and concluded that Static Control had "standing because it 'alleged a cognizable interest in its business reputation and sales to remanufacturers and sufficiently alleged that th[o]se interests were harmed by Lexmark's statements to the remanufacturers that Static Control was engaging in illegal conduct." The Supreme Court held that in order to have standing, a plaintiff "ordinarily must show that its economic or reputational injury flows directly from the deception wrought by the defendant's advertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff." Thus, direct application of a zone-of-interest test and proximate-cause requirement "supplies the relevant limits on who may sue under §1125(a)" and supplants the tests previously applied by the lower courts.
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